Firing up the market

Seoul - Asian technology companies came under pressure on
Thursday to slash prices of their tablet computers after Amazon.com launched
its Kindle Fire at a mass market-friendly $199.

From Samsung Electronics to Sony, major Asian tablet makers
have ambitious plans to take on Apple, whose iPad is the gold standard in the
booming market.

With their me-too type of products priced almost at the same
level as the iPad's starting price of $499, none of them have however been able
to gain any significant market share from Apple.

So far, Samsung has been seen as the most credible
challenger to the iPad and some analysts suggest it could lose its No 2
position to the eagerly-anticipated Fire.

The South Korean company's tablet marketing campaign has
also stumbled in recent months due to Apple's legal attempts to ban Samsung
tablet sales in Australia, the United States and Germany over patent
infringement, among other claims.

The Kindle Fire, while lacking many of the high-tech bells
and whistles common on tablets from cameras to 3G wireless connection, may
sound the death knell for a raft of devices based on Google's Android operating
system.

"The pricing is critical to gain traction in the tablet
market... Rival manufacturers have failed to attract consumers as they have
matched the iPad's price point without matching its content offering,"
said Adam Leach, an analyst at research firm Ovum.

"Amazon's retail-based business model allows the company
to subsidise the device on the premise that consumers will buy more from
Amazon, be that physical goods or its digital content."

Samsung's Galaxy Tab, Sony's S tablet, Motorola's Zoom and
many others from Acer and Asustek Computer all run on Android, which Amazon's
Fire also uses and combines with its online store.

By pricing the Fire at less than half the iPad - yet
stripping out costlier components and features - the internet retailer hopes to
get the device into millions of consumers' hands and then into Amazon books,
movies, music and other content.

Tough for Samsung

Samsung's new tablet Galaxy 10.1 is priced roughly the same
as the iPad. Even at that price, a slim profit margin of about 5% makes it
difficult for Samsung to cut prices sharply, analysts say.

Worldwide tablet shipments will more than triple to 60
million units this year and surge to 275.3 million units by 2015, research firm
IHS iSuppli forecasts.

Apple dominates the North American tablet market with 80% of
the 7.5 million units shipped during the second quarter of 2011, Strategy
Analytics says.

Analysts had expected Amazon's tablet to be priced around
$250, roughly half the price of Apple's iPad, which starts at $499.

Sony vowed in January to become the world's No 2 tablet
maker - behind Apple - by 2012 and Sony executives have since stuck to that
ambitious claim.

"We expect the Amazon tablet to... put pressure on the
other non-iPad competitors as they are unlikely to be able to compete on price
and value," UBS analysts said in a note.

"At the $199, we believe Amazon's tablet has the
potential to be disruptive to the market and, in particular, the non-iPad
market... Other tablet vendors will find it difficult to match Amazon's price
point."

HP's firesale of its TouchPad tablet at $99 just six weeks
after its launch created strong demand for its soon-to-be-killed product, a
sign of just how critical prices are in the sector.